Market failure Flashcards
1
Q
What six types of market failure are there?
A
Externalities Missing markets Asymmetric Knowledge Lack of Competition in Market Unstable Prices Labour Market Failure
2
Q
Define market failure
A
When the market mechanism does not lead to allocative efficiency
3
Q
Define Externality
A
External costs and befits that occur during economic activity which are not considered by the buyers and sellers involved.
4
Q
Reasons for labour market failure
A
Geographical Immobility of labour
(People do not live where jobs are, eg due to social ties (family)
Skills Immobility: ie structural unemployment
Solve: Retraining
Discrimination: Sexual, Age, Origin, Religion, Disability
Lack of information
5
Q
Conditions of Public Goods
A
Non-rivalry: If somebody consumes it, it does not reduce the quantity which is available for others
Non-excludability: If the good is provided, nobody can be stopped from consuming it
